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Tag Archives: Yield Curve

A Few More For Potential ‘Days’ Of Deflation

I’m not much for writing, so I’m sure nothing of a song-writer. While that may be the case, what I do know is that two of the missing lines in our Twelve Warnings of Deflation carol would belong to JGB’s and oil. How to fit them in, someone else would have to do so; the number we’d associate for JGB 10s is zero; while in WTI, we’re looking for a similarly negative number.Setting aside trying too hard to be cute, what I mean is very serious. There have been a bunch of warnings thus far,...

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Omicron Fears Fading, CPI Huge-r Still, Fed Hinting At Accelerated Taper, And Yet Euro$ Inversion (and other things) Is Still Here

The bond market is imploding, right? It has to be going by everything you hear. Did you know that the last two 30-year bond auctions had gone “awry”, as one mainstream news outlet put it? Another “media” shop declared them “catastrophic.”The second of those long bond sales was conducted just yesterday afternoon, right in time to run into the buzzsaw of the November CPI figures released today. According to the BLS, yep, the highest rate of general consumer price increases going...

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Euro$ Futures: There Be Landmines

This wasn’t meant to be a running tally. In fact, that was my major point in yesterday’s curve inversion missive; the thing inverted, it stayed inverted for a second day but maybe won’t change much for some time moving forward. Boring and consistent, what matters most in this first stage is only that the inversion sticks rather than expecting big changes in it.We’ll come back to it if or when something changes worth notice. Throw that out the window for Day 3, however. Somewhat surprising...

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OK, Your Euro$ Curve Has Inverted, Now What?

So, the eurodollar curve has inverted. Bad news. Now what? While this is a major milestone in the monetary system’s decidedly anti-inflation/growth journey, it is hardly the end point of it. On the contrary, though it takes a lot of negative, deflationary potential to distort the curve in this way, we need to see if the market sticks with that potential rather than just some flashing rush of otherwise fleeting concern (for the record, this hasn’t happened; once upside-down, it has in the...

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This Is A Big One (no, it’s not clickbait)

Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? Yes. And also today.Quirky and kinky, it doesn’t seem like a lot, at least not at first....

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If Not ‘Flow’, Then Has ‘Stock’ ‘Rigged’ The Flattening Curve In QE’s Favor?

Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really what this has been all about. As noted yesterday, the unnervingly steady flattening...

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Did Last Week Deliver Some Sour Certainty?

This sour/soar stuff goes back many years. The last time we went through the same hysteria (if for different reasons), everyone said the global economy was going to accelerate, take off, and sail onward forever after. The world was, they all claimed, set to soar.Globally synchronized growth. The bond market didn’t just disagree, it did so vehemently, a pessimism when 2018 began which only gained (and spread) as the year went further on. The more Jay Powell and those who followed him were...

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The ‘Growth Scare’ Keeps Growing Out Of The Macro (Money) Illusion

When Japan’s Ministry of Trade, Economy, and Industry (METI) reported earlier in November that Japanese Industrial Production (IP) had plunged again during the month of September 2021, it was so easy to just dismiss the decline as a product of delta COVID. According to these figures, industrial output fell an unsightly 5.4%…from August 2021, meaning month-over-month not year-over-year. Altogether, IP in Japan is down just over 10% since June, nearly 11% since peaking all the way back...

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Sorry Jay, Curve(s) #continuity Is Not A Good Thing

Where is the “tantrum?” If there is one, to this point it has been historically minor changes limited to the shorter end of the yield curve between the 2-year and 5-year USTs. This section of it is more influenced by what the market believes Jay Powell’s Fed will do especially now that it likely will be Jay Powell’s Fed for another (dismal) four years. That’s not tantrum territory, however. What is supposed to be is the long end where growth and inflation expectations trade more...

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Bill Issuance Has Absolutely Surged, So Why *Haven’t* Yields, Reflation, And Other Good Things?

Treasury Secretary Janet Yellen hasn’t just been busy hawking cash management bills, her department has also been filling back up with the usual stuff, too. Regular T-bills. Going back to October 14, at the same time the CMB’s have been revived, so, too, have the 4-week and 13-week (3-month). Not the 8-week, though.Of the first, it’s been a real tsunami at this tenor, too. Up to early August, Treasury had regularly (weekly) sold $40 billion in one-month paper. From then to the end of...

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